FEMA red tape strangling local governments

As Jefferson Parish still awaits millions of dollars in reimbursements for emergency-repair spending after Hurricane Katrina, its finance director, Gwen Bolotte, has grown increasingly weary of delivering the same records again and again to FEMA or state disaster recovery officials.

With money just now beginning to flow to bigger infrastructure repair projects, she blames a revolving door of FEMA officials and relentless document requests from the state. Send in two invoices under the same contract, and state monitors typically will demand a copy of the contract each time, Bolotte says.

"I would think there would be a permanent file; most auditors have a permanent file," she said. "People are getting frustrated, having to produce the same paperwork."

Bolotte is part of a large contingent of locals officials who are mired in what seems an endless slog as they try to land grants through FEMA's Public Assistance program.

The so-called PA, unfamiliar to most citizens and perplexing even to many government officials seeking the money, is the top source of federal disaster funding to rebuild public infrastructure: schools, roads, sewer lines, hospitals and civic auditoriums, police and fire stations. The program also offers rebuilding money to certain private institutions, such as universities, that are deemed essential to civic life.

FEMA expects to spend a whopping $2.7 billion on repair and construction projects across south Louisiana, more than five times the city of New Orleans' annual operating budget before Katrina hit. That doesn't include billions of public assistance dollars directed to emergency purposes, such as overtime and debris removal.

The process of getting the money, however, has proceeded in slow motion, because of the program's inherent complexity and because of a failure of local officials to master the bureaucratic labyrinth.

Of the $2.7 billion ultimately expected to be spent on "permanent" work, $2.1 billion, or 78 percent, had been reviewed and approved, or "obligated," by FEMA as of June 28 -- but just $532 million, or 20 percent, had been released by the state. State officials said the release of money is influenced in part by whether they believe an entity is ready to spend it.

As regional FEMA executive Jim Stark noted: "It is grant money with strings attached. There are t's to be crossed and i's to be dotted."

The pace of reviews by FEMA and the Governor's Office of Homeland Security and Emergency Preparedness dictate how quickly the grant money flows. FEMA officials write and critique project worksheets before they obligate a grant, and then state officials conduct their own reviews -- requiring extensive documentation from local officials -- before they release money.

Moreover, the frequent need for an increase in the amount authorized for a project after locals demonstrate that FEMA's initial estimates were too low requires a new round of FEMA and state reviews, consuming even more time.

Many local officials view the process as unwieldy and confusing, a drag on efforts to rebuild. Testifying before a U.S. Senate disaster recovery panel Tuesday, New Orleans Mayor Ray Nagin said that while he is seeing "positive movement in our relationship" with FEMA, law and procedural changes are needed to make it easier for local entities to land PA money.

While views differ on whether there is a need to change the Stafford Act, a federal law that guides disaster responses, state and FEMA officials running the PA program said they are working to streamline procedures while still guarding against abuses of the federal purse.

While the PA benefits don't pay costs that are covered by insurance -- and include penalties for entities that didn't buy enough insurance -- the program will, in theory, foot much of the bill for putting storm-ravaged infrastructure back together.

And, in a rarity for any government program, FEMA puts no cap on total spending, provided the storm damages are well-documented.

"As long as we can agree on scope of work, cost should not be an issue," said Timothy Brunette, a trainer for FEMA officials handling PA projects.

But even generally grateful recipients moan over the tedious and confounding process of securing the money, from preparing the first worksheet to undergoing auditor reviews to completing the bricks-and-mortar work.

Reaching agreement with FEMA on the scope of work, as well as "reasonable cost" for a project in a post-disaster economy, can become a tug-of-war. Nor is it easy to assemble enough money to get a construction project going, since PA is set up as a reimbursement program, and many agencies -- especially now -- have little cash at their disposal for upfront costs.

Local agencies must furnish records covering everything from past maintenance to completion of bids for a repair, and, in an exercise familiar to citizens navigating recovery programs, they often have to furnish them more than once.

Those obstacles -- along with varying directives from a rotating cast of FEMA project monitors -- are cited by local officials as factors in the painfully slow release of PA money.

Just $23 million of $304 million FEMA expects to spend in two public school systems in New Orleans had been released as of June 21, for example, although $136 million had been obligated by FEMA, meaning the state can release it after its demands are met.

Also, PA-financed repairs to New Orleans streets, which could wind up costing hundreds of millions of dollars, are far from reality because the preparation of worksheet information by FEMA and the city is just now getting under way.

Weary of being a rhetorical punching bag, FEMA officials made it clear that the PA program depends on legwork by local agencies, which, even as they struggle with thin staffs, must assemble documents and help assess damages.

Federal administrators pointed out, for example, glaring weaknesses in construction planning by the Recovery School District and said Nagin's public works department was months slow in preparing a list of streets that need to be repaired. They demanded the list by July 31.

Criticism of the school district led to a push by state Superintendent Paul Pastorek to ramp up work on damaged schools. Nagin's public works director, Robert Mendoza, conceded that the city had done little to prepare the streets list, but he said that was largely because of a past dispute with FEMA about what sort of damage would be covered. Nevertheless, Mendoza said the July 31 deadline would be met.

At times, FEMA officials note, local officials who blame slow progress on state and federal bureaucrats have made glaring mistakes of their own in how they use the PA process.

Slidell's finance director, Sharon Howes, noted recently that after the city landed -- and spent -- $569,000 for equipment and vehicles lost during Katrina, it faced a FEMA demand for documentation to justify the grant once again. The demand came when Slidell asked for a change in a Federal Emergency Management Agency "Project Worksheet" that would add $238,000 to the earlier grant.

"It's almost like they're trying to wear me down, so that I give up," said Howes, who said she was given to feeling like a homeowner trying to settle an insurance claim.

But FEMA officials said a routine evaluation of how money was spent in the first part of a grant turned up a glaring problem: Slidell had taken monies provided to replace police vehicles with cars of a similar vintage and value and had used the funds to buy a smaller number of new, better-equipped police cars.

FEMA has a process for executing just that kind of transaction, but Slidell ran afoul of the rule. The city erred in not applying for an "alternate" use of grant proceeds, a process that would have meant a 25 percent cut in the size of the grant, FEMA spokesmen said.

Just what will be done about the mistake, and the request for more equipment money, is "under review," the officials said.

FEMA officials say they can't estimate how long it takes for a PA project to move through the system because they vary dramatically in size and complexity. But long waits for infrastructure repairs that clearly qualify for PA grants anger and befuddle residents who are slogging through their own rebuilding challenges and are counting on government to do its part.

Evy Assaf, a resident of Lakeview for 60 years, said she plans to contact the city's Department of Public Works, which is just beginning to assemble a list of needed street repairs, to ask that it secure help for her street, Spencer Avenue, near the site of the 17th Street Canal floodwall break. The street is full of major holes, beyond the capabilities of the city's celebrated Pothole Killer machines, and has a protruding manhole cover that threatens to rip out the underbelly of any car crossing it, she said.

The needs couldn't be more obvious, Assaf says. How much longer before the work crews and heavy equipment show up?

"There certainly should be some kind of efficient policy in force to take care of some of these problems," Assaf said during a break from cleaning windows and shoveling dirt at her home. "I really don't know what the problem is, why there should be such a delay and such an inconvenience to people who are trying to come back."

FEMA officials say they are working closely with local officials to smooth out rough points in the grant process, and that their efforts, guided by the nearly 20-year-old Stafford Act, face an epic test, with more than 600 workers assigned to the Louisiana mission.

The federal officials say they are trying to remove one key bottleneck in the quest for myriad repairs -- thin staffing at the local level to handle paperwork and surveys -- by explaining to the agencies how they can secure extra PA money for administrative costs.

Some local officials are, indeed, seeing traction in freeing up of PA grants, pointing to the influence of John Connolly, 49, an agency veteran who helped lead recovery operations at the Pentagon after the terrorist attacks of Sept. 11, 2001. A soft-spoken, casually dressed bureaucrat with an easy grasp of construction project minutiae, Connolly wants his division to squeeze the biggest impact from the PA pot, saying, "I've never seen the agency bend over so far to extend the maximum grant amount that we can."

Connolly says FEMA will stick around in south Louisiana, for many years if necessary, to monitor rebuilding work, noting that the agency still keeps an office in Northridge, Calif., to handle issues from a 1994 earthquake.

New Orleans Sewerage & Water Board officials, who have sparred with FEMA almost since Katrina's waters receded over how much of the utility's badly damaged system should qualify for PA money, say FEMA representatives are becoming more helpful and pragmatic. In recent weeks, section chief Chris Colletti informed the board that FEMA had given up on trying to determine which pipe leaks were caused by Katrina and that the PA program will provide comprehensive repairs to the system, at least to the point of restoring its pre-storm capacity.

City officials celebrated the news.

"We've made more progress in the last 90 days than we had in the prior year," said the board's executive director, Marcia St. Martin. "We are cautiously optimistic."

The water board has nearly 400 PA projects, many of them essential to quality of life, in the works. FEMA estimates that the program so far will provide $171 million for rebuilding needs. Of that, about $72 million, or 42 percent, has been released.

In the St. Tammany public school system, risk manager Kirt Gaspard, the district's point man for PA requests, said there have been moments of indecisiveness on FEMA's part because of turnover among project officers and times when the same documents have been requested more than once.

But he praised the efforts of FEMA and the state Office of Homeland Security in pushing rebuilding projects forward. He said they have been especially cooperative in the case of Salmen High School, which was ripped apart by an eight-foot storm surge, quickly allocating about $15 million to get a temporary campus open by August 2006. FEMA has tentatively approved spending more than $20 million on a permanent Salmen campus. Completion of architectural drawings is still months away.

"This is kind of a new scenario for FEMA as well because of the magnitude of destruction that Katrina caused, so you can expect they had a lot of new hurdles to overcome themselves, but overall we've done well in navigating the process," Gaspard said.

A recent decision by Congress and President Bush to waive a requirement for a 10 percent local match for PA repair projects eliminated a key chokepoint, officials say.

While the Louisiana Recovery Authority previously had agreed to use Community Development Block Grant money to cover the required PA match, the dual funding sources and their differing rules created a paperwork nightmare and delays, LRA Executive Director Andy Kopplin said.

Congress has discussed revamping the Stafford Act, which governs FEMA assistance, to add flexibility and to give local FEMA officials greater leeway to cut through red tape, particularly in response to overwhelming disasters like Katrina and Rita. But that idea hasn't gained momentum in a Congress restive about the spiraling costs of the Gulf Coast recovery.

Meanwhile, some would-be beneficiaries of PA grants fume about the slow delivery of help. Among them is Nicholas Felton, president of a union for New Orleans firefighters, who five months ago complained loudly about lack of progress in securing millions of dollars from FEMA for repairing uninhabitable firehouses that are plagued by sewage backups and rodents.

He still complains but can't pinpoint exactly whom to blame. Many firefighters are still housed in trailers that aren't safe in foul weather.

"We have not seen any movement, any money, from federal, state or local officials," he said. "We have only been successful enough in repairing fire stations with generous donations from people around the city and country, and with firefighters putting in the work. I wish I knew where it (rebuilding money) is so that we could go tell folks to let it loose."

Officials in Nagin's administration who handle PA paperwork, including Deputy Chief Administrative Officer Cynthia Sylvain-Lear, say little, "other than they're working on it, and they're trying to get it. But it's been almost two years and we haven't gotten anything," Felton said.

Sylvain-Lear couldn't offer a timeline for fire station repairs. She blamed the lack of progress on a broader problem: Project Worksheets prepared by FEMA that estimate repair or rebuilding costs using figures that are far too low, forcing the city to ask for an amended Worksheet. Without the use of higher figures, the city is forced to find money elsewhere in its budget to fill the gap, she said.

While FEMA officials are willing to change worksheets repeatedly when given evidence that their cost estimates are too low, delays caused by those negotiations pose a big problem for local agencies, Kopplin said. State officials are urging FEMA to develop a policy, he said, that would allow a PA recipient to borrow against other approved projects to cover temporary funding gaps of the sort described by Sylvain-Lear.

In St. Bernard Parish, officials rail about the lack of upfront money for PA projects that they say makes it difficult, if not impossible, to advance major restoration projects. Such projects include rebuilding the parish's sewer system and repairing St. Bernard's civic center and government complex in Chalmette. Ironically, the last two projects, expected to cost more than $3 million combined, were cited by FEMA officials among 20 south Louisiana projects that will show a positive PA impact.

Unlike some local parishes, St. Bernard has little flexibility in its budget to cover early costs of a construction project while waiting for a FEMA reimbursement, and many contractors won't bid if they aren't sure when they will be paid, said Joey DiFatta, chairman of the parish council.

"We need federal help up front rather than on the back end," DiFatta said. "How the hell do you spend it if you don't have it?"

FEMA officials say that while PA offerings are labeled reimbursements, federal law allows advances on the money. But the state decides the details of when and how to front money.

Mark Debosier, disaster recovery chief for the Governor's Office of Homeland Security, said DiFatta is misinformed if he thinks construction advances aren't available. The state has a policy of advancing, when asked, up to 75 percent of the cost of a project, in increments that can be spent in a timely fashion.

"I don't know that St. Bernard has ever even asked," he said. "It's primarily a reimbursement program, but there are provisions for advances."

The state's offer of 10 percent of FEMA-estimated project expenses for design and engineering is well-known. But Debosier said there has been limited use of other construction advances. He suggested that many agencies don't apply for them because they haven't figured out how to pay the portion of costs not covered by the PA grant.

The LRA's Kopplin said the state hasn't promoted use of construction advances until recently. To be sure, Slidell's finance director said she had not heard about the availability of construction advances. And Tommy Couvillion, district manager of Associated General Contractors, said many companies that have landed PA-related work, most of it through the New Orleans Sewerage & Water Board, reluctantly agreed to extend themselves, not sure when FEMA reimbursements would arrive.

"They're being good corporate citizens, trying to help the city get back on its feet. If you can't treat the sewage, and you don't have potable water, we're all dead in the water," Couvillion said. "The unknown is always fraught with anxiety, you know? You're betting the payments are going to come sooner (rather) than later. You're hoping, and you keep the fingers crossed."

Coleman Warner can be reached at cwarner@timespicayune.com or (504) 826-3311.